Millionaire Librarian

Financial Independence is the Important Part of FIRE

Financial independence is when the money your assets make replaces your income, meaning you no longer need to work.

I think the most important thing about financial independence is that it’s a progressive concept — you get more and more benefits the further you go on the spectrum. Someone with $10k has more independence than someone in debt. They can afford to take a couple of unpaid days off or go a month without work if they need to. A person in debt needs every cent they can make.

Expenses matter too. It’s the other side of the balloon. Someone with lower expenses and the same amount of money has more independence than someone with higher expenses. For example, if two people each have $100k, the one who spends less can make it last longer.

Things get messier with the RE part — is it really RE if you work a part-time job, or rent out a couple of houses? It’s not technically fully retired, and some people love to point that out. Maybe you have a hobby that brings in a little money. Some would say you’re still “working” even if it’s just a couple hours a week.

But that argument misses the point. RE is a label — a yes/no switch people like to argue about. FI is the thing that’s actually real. It’s the spectrum you’re moving along every time you pay down debt, cut an expense, or add to your net worth. You don’t need someone to certify you as “retired” for that progress to count. You just need to keep sliding down the spectrum toward more freedom.